Dozens of spectators pressed against the glass of the high-roller pit. Inside, playing at a green-felt table opposite a black-vested dealer, a burly middle-aged man in a red cap and black Oregon State hoodie was wagering $100,000 a hand. Word spreads when the betting is that big. Johnson was on an amazing streak. The towers of chips stacked in front of him formed a colorful miniature skyline. His winning run had been picked up by the casino's watchful overhead cameras and drawn the close scrutiny of the pit bosses. In just one hand, he remembers, he won $800,000. In a three-hand sequence, he took $1.2 million.

You may think this is another "card counting" story. Some famous and successful traders, like Blair Hull and Jeff Yass in New Market Wizards, and more notably Ed Thorpe and Bill Gross, got their start counting cards at the blackjack table.

Later on, Ben Mezrich wrote a book called "Bringing Down the House" about an MIT blackjack team that made millions in Vegas. (The book was later turned into a crappy movie with Kevin Spacey. I normally like Kevin Spacey, but this time he was slumming for a paycheck. Or so I heard. I read the book but missed the flick.)

Anyhow, when you hear about something making millions at a blackjack table, you think automatically think "card counting" — the spotter, the big player, doing a smash and grab on the casinos, that kind of thing.

But what is so fascinating about Don Johnson's multi-million dollar scores is, he didn't count cards (which would have gotten him thrown out anyway).

The edge he found was actually much more subtle, and brilliant, than that. Here is the money excerpt:

Johnson is very good at gambling, mainly because he's less willing to gamble than most. He does not just walk into a casino and start playing, which is what roughly 99 percent of customers do. This is, in his words, tantamount to "blindly throwing away money." The rules of the game are set to give the house a significant advantage. That doesn't mean you can't win playing by the standard house rules; people do win on occasion. But the vast majority of players lose, and the longer they play, the more they lose.

Sophisticated gamblers won't play by the standard rules. They negotiate. Because the casino values high rollers more than the average customer, it is willing to lessen its edge for them. It does this primarily by offering discounts, or "loss rebates." When a casino offers a discount of, say, 10 percent, that means if the player loses $100,000 at the blackjack table, he has to pay only $90,000. Beyond the usual high-roller perks, the casino might also sweeten the deal by staking the player a significant amount up front, offering thousands of dollars in free chips, just to get the ball rolling. But even in that scenario, Johnson won't play. By his reckoning, a few thousand in free chips plus a standard 10 percent discount just means that the casino is going to end up with slightly less of the player's money after a few hours of play. The player still loses.

But two years ago, Johnson says, the casinos started getting desperate. With their table-game revenues tanking and the number of whales diminishing, casino marketers began to compete more aggressively for the big spenders. After all, one high roller who has a bad night can determine whether a casino's table games finish a month in the red or in the black. Inside the casinos, this heightened the natural tension between the marketers, who are always pushing to sweeten the discounts, and the gaming managers, who want to maximize the house's statistical edge. But month after month of declining revenues strengthened the marketers' position. By late 2010, the discounts at some of the strapped Atlantic City casinos began creeping upward, as high as 20 percent.

"The casinos started accepting more risk, looking for a possible larger return," says Posner, the gaming-industry expert. "They tended to start swinging for the fences."

Johnson noticed.

"They began offering deals that nobody's ever seen in New Jersey history," he told me. "I'd never heard of anything like it in the world, not even for a player like [the late Australian media tycoon] Kerry Packer, who came in with a $20 million bank and was worth billions and billions."

When casinos started getting desperate, Johnson was perfectly poised to take advantage of them. He had the money to wager big, he had the skill to win, and he did not have enough of a reputation for the casinos to be wary of him. He was also, as the Trop's Tony Rodio puts it, "a cheap date." He wasn't interested in the high-end perks; he was interested in maximizing his odds of winning. For Johnson, the game began before he ever set foot in the casino.

Did you catch that? Here's the breakdown:

The odds on most casino games are unbeatable, as most everyone knows. (How else could they pay that $500,000 electric bill every month.)

"Whales," i.e. players willing to drop huge sums, are a casino's most profitable patrons by far — and the casino will bend over backwards to keep these whales happy. But only if they reliably lose.

When times get tough and revenues drop, casinos offer special deals to high rollers to try and pull them in — essentially saying "We will shave down our statistical edge against you, if you agree to come and play."

It's estimated that the house has a 2% advantage over the typical blackjack player.

That 2% edge is like a biased coinflip — big enough for the house to win all the money over time.

With 100% correct theoretical play — not counting cards, just playing every hand in mathematically optimal fashion — it's estimated that the house edge is whittled down to 0.5%.

Now you are getting very, very close to 50/50 odds… but that 0.5% is still enough for the house to make good.

Johnson figured out how to drive the house edge even lower. Through hard negotiations, he got it down to (by his estimate) just one quarter of one percent.

That's super close to dead even — but still not quite enough. And then came the coup de gras: With some negotiated loss discounts on top of that — agreements for the casino to reimburse a certain amount of if Johnson lost — he actually flipped the overall edge in his favor without the casino realizing it.

House management got played by a math shark:

So how did all these casinos end up giving Johnson what he himself describes as a "huge edge"? "I just think somebody missed the math when they did the numbers on it," he told an interviewer.

Johnson did not miss the math. For example, at the Trop, he was willing to play with a 20 percent discount after his losses hit $500,000, but only if the casino structured the rules of the game to shave away some of the house advantage. Johnson could calculate exactly how much of an advantage he would gain with each small adjustment in the rules of play. He won't say what all the adjustments were in the final e-mailed agreement with the Trop, but they included playing with a hand-shuffled six-deck shoe; the right to split and double down on up to four hands at once; and a "soft 17" (the player can draw another card on a hand totaling six plus an ace, counting the ace as either a one or an 11, while the dealer must stand, counting the ace as an 11). When Johnson and the Trop finally agreed, he had whittled the house edge down to one-fourth of 1 percent, by his figuring. In effect, he was playing a 50-50 game against the house, and with the discount, he was risking only 80 cents of every dollar he played. He had to pony up $1 million of his own money to start, but, as he would say later: "You'd never lose the million. If you got to [$500,000 in losses], you would stop and take your 20 percent discount. You'd owe them only $400,000."

In a 50-50 game, you're taking basically the same risk as the house, but if you get lucky and start out winning, you have little incentive to stop.

So when Johnson got far enough ahead in his winning sprees, he reasoned that he might as well keep playing. "I was already ahead of the property," he says. "So my philosophy at that point was that I can afford to take an additional risk here, because I'm battling with their money, using their discount against them."

Now I'm no blackjack player (and never will be). There are bigger games to play, with better odds and less headache (like poker for example!).

But from a trading perspective, what Don Johnson did is absolutely fantastic:

He waited patiently for a huge edge to develop (refusing to play on anything but his terms).

He used observation, psychology and math to spot one of the biggest strategy blunders in casino history (giving discounts to an unknown high roller that wiped out the house edge).

He protected his capital and ensured the risk would be minimal, even if he lost.

When he saw that he was ahead, he chose to pyramid — press his bets — and absolutely crushed the tables, to the point where they simply wouldn't let him play anymore.

That, friends and neighbors, is the epitome of trading excellence.

Finding an incredible reward to risk opportunity… cultivating your edge through careful analysis and bold decision making… stepping up with proper capitalization and risk control… and then maximizing that edge to the hilt.

And as a side note, how many "random walk" academic theoreticians would have said it's even possible, in the known universe as we know it, to make circa $5 million at the blackjack tables in one night… and repeat the feat twice more… and to do it all without counting cards?

"No way," they would say. But of course there was a way. Johnson did it.

Point being, it's no wonder the efficient market theorists have no clue — they cannot conceive of the opportunity sets that arise, or the dynamic features of the fitness landscape, when it comes to the sufficiently motivated and creative human mind.

The edges are out there… and you don't have to be a Don Johnson to find them.